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Part 1 You have been asked by the owner of a new consultancy called Voyager to prepare the master budget. The consultancy consists of the owner who charges out at $68 per hour and the junior staff who are charged out at $42 per hour. The owner has advised you that the following hours are forecast for each quarter. The consultancy has a credit system of payments with 60% of payment received the quarter in which they are earned and the remaining 40% earned the following quarter. The opening accounts receivable is $13,200 incl GST. The GST is accounted for on an accrual basis. Prepare a quarterly revenue receipts forecast and cash collections forecast for the next financial year. Hours September…

Question 1 Sunshine Ltd acquires an item of machinery on 1 July 2011 for $420000. When the asset is acquired, it is considered to have a useful life for the entity of six years. After this time, the machine will have no residual value. It is believed that the pattern of economic benefits would best be reflected by applying the sum-of-digits method of depreciation. However, contrary to expectations, on 30 June 2014 the asset is sold for $150000. Required: Calculate depreciation expense and gain or loss on disposal of the machinery and prepare all the journal entries necessary for Sunshine Ltd for the year ended 30 June 2012, 30 June 2013, 30 June 2014. Question 2 As at 1 July…

Question 1 Morning Star Ltd was registered on 1 July 2018, as a company with a constitution limiting the shares that could be offered to 5 000 000 Ordinary shares (including all classes) and 2 000 000 preference shares. The company issued a prospectus dated 1 July 2018 inviting the public to apply for 3 000 000 Ordinary A class shares at $3.00 per share. The terms of the shares on issue are $1.50 on application, $1.00 on allotment and $0.50 to be called within six months of allotment before 31 December 2018. If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will be applied to allotment and calls before any…

Task Details On 1 July 2018, Bombay Ltd acquired all of the shares of Portobello Ltd, on a cum-div. basis, for $2,700,000. At this date, the equity and liability sections of Portobello Ltd’s statement of financial position showed the following balances: Share capital — 400,000 shares $ 1,200,000 General reserve 350,000 Retained earnings 960,000 Revaluation surplus 60,000 Dividend payable 25,000 At 1 July 2018, Portobello Ltd’s assets included $46,000 of recorded goodwill. The dividend payable at acquisition date was subsequently paid in August 2018. At acquisition date, all the identifiable assets and liabilities of Portobello Ltd were recorded at amounts equal to fair value except for the following: Carrying amount Fair value Land $500,000 $550,000 Inventory 45,000…

Laurie Manufacturing Ltd., manufactures two types of Lawn Mowers, Standard and Deluxe. The company uses simple costing system and the two direct cost categories are materials and labor. It also has one indirect cost pool and allocates indirect costs on the basis of machine hours. Information related to the production in the year 2018 is as follows and the owner is concerned about the decline in the market share for the company’s Standard model. Laurie Manufacturing Ltd. Standard Deluxe Units sold 3200 1800 Selling price $125 $200 Direct material cost per unit $30 $45 Direct manufacturing labor cost per hour $16 $16 Direct manufacturing labor-hours per unit 1.50 2.25 Production runs 40 85 Material moves 72 168 Machine setups 45…

Topic: Consolidation worksheet Ethan Ltd acquired all the issued shares (ex div.) of Darren Ltd on 1 July 2017 for $110 000. At this date Darren Ltd recorded a dividend payable of $10 000 and equity of: Share capital $54 000 Retained earnings 36 000 Asset revaluation surplus 18 000 All the identifiable assets and liabilities of Darren Ltd were recorded at amounts equal to their fair values at acquisition date except for: Carrying amount Fair value Inventories $ 14 000 $16 000 Machinery (cost $100 000) 92 500 94 000 The machinery was considered to have a further 5-year life. Of the inventory, 90% was sold by 30 June 2018. The remainder was sold…

Super Retail Ltd (Super Retail) acquired 100% of the shares of New World Retail Ltd (New World Retail) on 1 July 2017. The cost of investment was $620 000. At that date the capital and reserves of New World Retail were: Share capital $260 000 Retained earnings $200 000 At the date of acquisition all assets of New World Retail were considered to be fairly valued, except for a plant that had a fair value $20 000 greater than its carrying amount. The cost of the plant was $100 000 and it had accumulated depreciation of $60 000. The plant had original estimated useful life of 10 years. During financial year 01/07/2017-30/06/2018, New World Retail sold $30 000…

Problem 1: Long Service Leave Darwin Ltd has five employees. According to their particular employment award, long service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks’ leave. If an employee were to leave before the completion of 12 years’ service, no entitlement would be paid. High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest—that is, for a total of 12 years—are as follows: Name…

Beckett Pumps is a manufacturer of commercial and heavy industrial Pumps. The firm’s two product lines are called Directlift and Gravity. The primary raw materials are flexible steel sheet, and 23cm x 60cm of plastic sheets. Each Directlift pump requires a 2/3 of a metre and a Gravity pump requires a one metre of steel sheet. Allowing for normal breakage, the company can cut either enough to make four Directlifts or two Gravity pumps from a single plastic sheet. Other raw materials are costly and treated as indirect materials. Jo Smith Beckett Pump’s accountant has gathered the following information in preparation for the company’s annual budget for the next year. Sales in the fourth quarter of the current year are…

Question 1 Clear Ltd bottles and distributes mineral water from the company’s natural springs. The company markets two products: 1-litre disposable plastic bottles and 15 litre reusable plastic containers. Required For 2019, Clear Ltd’s marketing manager forecasted monthly sales of 320,000 1-litre bottles and 80,000 15-litre containers. Average selling prices are estimated at $0.20 per 1-litre bottle and $1.20 per 15 litres container. Prepare a revenues budget for Clear Ltd for the year ending 31 December 2019. Clear Ltd begins 2019 with 720,000 1-litre bottles in inventory. The manager of operations requests that 1-litre bottles ending inventory on 31 December 2019 be no less than 480,000 bottles. Based on sales projections as budgeted in requirement ‘a’ above, what is the minimum…

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